November 1st, 2012

Defense Spending is a Priority of Russian Budget 2013-2015

The Russian State Duma has approved the country’s draft federal budget for the next three years at first reading.

Defense Minister Anatoly Serdyukov won one more battle for public money

Overall, the federal budget demonstrates the government’s commitment to the responsible macroeconomic policy. The Russian government is prepared to deal with the probable drop in oil revenues, that constitute almost half of the federal government income. Russia’s huge national reserves as well as flexible currency exchange rate allow dealing with an economic crisis of any scale.

The budget breakdown provides insight on the priorities of the Putin’s team. One third of the federal government spending is assigned to defense, security and police. According to the analysis of Gaidar Institute, a leading Russian think tank, the military spending is the only part of the budget growing in real terms in 2013-2015 with the total three-year increase of 37%. In contrast, the healthcare spending will be cut by 50% from the current mediocre level.

The details on the defense budget are not disclosed: 50% of spending is secret. Assumingly, most of the money will be spent on the rearmament of the Russian military force. These huge, largely nontransparent cash flows have already provoked new clashes between Kremlin clans. Investigators from the Chief Military Investigative Directorate of the Investigative Committee (IC CMID) raided on the offices and luxurious apartments of the high-ranked defense ministry employees soon after the Defense Minister presented the military budget to the parliament.

The federal budget also demonstrates the real balance of power in Russia. The functioning of the newly elected President and his administration, a superficial body without any status in the Russian constitution, will cost in 2013 50% more than in 2012. The Medvedev’s cabinet is almost four times cheaper.

The federal budget reveals that “siloviki” and their leader Vladimir Putin will do whatever it takes in order to stay in power and enjoy the public money bonanza as long as possible.


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